"The decision is a flagrant violation of international law, international legitimacy and the UN resolutions," the ministry said in a statement on Wednesday.
The Moldovan decision came after a political crisis in the Eastern European country, which on Sunday saw the top court revoke President Igor Dodon's powers and appoint former Prime Minister Filip as interim president. He then swiftly dissolved the country's parliament and called a snap election to be held in September.
Announcing the embassy move on Tuesday, Filip said the decision was "a long overdue commitment to support our allies" and that he wanted it to be respected "regardless of what happens after the snap elections".
The Palestinian foreign ministry said Filip is "taking advantage of political uncertainty in his country to gain support from the US and Israel".
Hanan Ashrawi, a member of the Palestine Liberation Organization (PLO) Executive Committee, called on the European Union to take immediate action against Moldova for disregarding the EU's consensus on the Middle East conflict.
"The European Union should halt Moldova's political and economic integration until the latter rescinds its illegal and provocative action and realigns its policy with international law and the collective EU position regarding the Palestinian question," she said.
Jerusalem remains at the heart of the Israeli-Palestinian conflict. Israel occupied East Jerusalem in 1967 and later annexed the territory, a move that was not recognised by the international community.
The Palestinians want East Jerusalem as the capital of a future state, while Israel claims the city as its capital.
Israel has been trying to convince nations to transfer their missions from Tel Aviv to Jerusalem. So far, the US and Guatemala have moved their embassies.
Moldova would become the first European country to transfer its embassy to Jerusalem if it carries out the move.